Impacts of Budget Transparency on Economic and Political Outcomes

Abstract

his article focuses on a review of literature on the impacts of budget/fiscal transparency on economic and political outcomes. It also considers the definitions and measurements of budget/fiscal transparency indices used in the literature reviewed – thirty-seven papers published in English, online, during the 2000–2021 period. The reviewed papers mostly deal with budget transparency at the national (central) government level, probably due to the problems of measurement at subnational – state, provincial, regional, local – government levels. Tables 1 and 2 systematise the economic and political outcomes and their various measures found in the reviewed literature, and the possibility of using them in further research. Among economic variables, the most pronounced impact is on government budget balance, debt, and expenditures. Governments with higher budget transparency are associated with better budget balance, credit ratings, budget estimation and forecasting, as well as with higher expenditures and revenues, underestimation of revenues and expenditures, lower borrowing costs, government debt, and inflation. The highest proven political impact of budget transparency is on corruption. Governments with higher levels of budget transparency are perceived as less corrupt, i.e. having better control of corruption, as well as higher government quality, effectiveness, and spending efficiency. Moreover, they have more popular governors and higher public participation.